In an economy where you can easily deliver packages or drive uber, there will always be close to zero unemployment. This number stopped making sense a few years ago.
> strong consumer spending
In a high inflation environment, one has to consume "strongly" just to maintain the same standards of living.
> average income increasing at a rate higher than inflation
If you underreport inflation, then the average income will increase faster. But even if not, average is not what you and I receive, and it is determined by some people making lots of money while others have stagnating salaries.
> majority is doing better than most years
You cannot prove this from the above points. Average income doesn't mean that the majority is doing better. Something called inequality will not allow that to happen.
> They might not feel that way though
That is pop psychology at its worst. Nobody cares about feelings, you just need to look at the numbers in a critical way.
> In a high inflation environment, one has to consume "strongly" just to maintain the same standards of living.
Strong disagree: you can't spend what you don't have (or can't borrow), so spending is a vital signal.
There's a natural experiment that just happened that refutes your argument: after Covid, most of the world had high inflation (with some actual recessions), but the US did better than everyone else, with stronger American consumer spending helping the recovery (leading to more jobs to service the strong demand). Your argument falls apart when you consider why UK or French consumers consume as "strongly" to maintain their lifestyles.
> If you underreport inflation, then the average income will increase faster.
There's no one way to calculate inflation (since this depends on how you choose your 'basket'). But like I said, based on vibes, everything is awful.
> Your argument falls apart when you consider why UK or French consumers consume as "strongly" to maintain their lifestyles
They don't have access to cheap credit as the US consumer has, and being smarter than Americans they refrain from going into more debt.
> There's no one way to calculate inflation
Yes, there is, it is just different for lower income earners. Economists just don't want to measure the impact on people who have to spend large part of their salaries on rents, health care, cars, all things with prices that increase higher than official inflation.
Did you purposely leave out my parenthetical to use it as a dunk? Borrowers are not dumb (and the amount of debt is also a useful signal on economic health by the way, and right now it's not terrible; definitely not in recession territory)
> Yes, there is, it is just different for lower income earners
Well, don't leave me hanging - what's the one way to calculate inflation then? Which specific mix of goods and services (and locations) should be used as a national benchmark in THE inflation equation?
I don't disagree with your overall point, but I do think pre-2008-crash mortgage lending could be a counterexample. Certainly there were a lot of shenanigans going on, but ultimately borrowers made the -- IMO dumb -- choice to stretch themselves far too thin, and buy bigger and more expensive houses than they truly could afford.
Perhaps everyone today has learned from history, though. (But I wouldn't bet on it.)
Any given borrower, on their own, is unlikely to be dumb.
The market can be irrational far longer than they can be solvent, however, and not being ‘dumb’ can make that worse.
Pre’08, you had to be dumb as a borrower in 90% of markets, or you’d be flat out unable to buy anything. As to if continuing to buy in those conditions was dumb or not, is mostly something that can only be judged retroactively.
Sure, you can borrow more, but that doesn't seem to be what's happening, at least not contrary to long-term trends. Credit card debt is going up[0], but at a rate that looks exactly like (or perhaps slightly lower than) what it would be if you just extrapolated from 2019 and ignored the pandemic (and recent data in the last year shows that growth in that number may be slowing a little). Debt servicing as a percent of disposable income looks pretty good too[1]; much lower than the absurdity that was the 00s, and on par with or better than pre-pandemic 10s. You have to go back to the early 90s to get much better than that, but if you keep going back, it gets much worse.
Certainly these are just two metrics among many that people could look at, but if we're talking about consumer spending being strong, it does not appear to be because people are borrowing more today than long-established trends would expect. (I do think it's concerning that consumer debt has more or less only gone up over time, but that's a separate discussion.)
> In an economy where you can easily deliver packages or drive uber, there will always be close to zero unemployment. This number stopped making sense a few years ago.
Ah I see... your entire worldview is predicated on just assuming different facts than what your interlocutors are. Feel free to substantiate this rather fundamental claim.
> That is pop psychology at its worst. Nobody cares about feelings, you just need to look at the numbers in a critical way.
"Look at the numbers in a critical way" is an interesting framing of "make shit up."
> low unemployment
In an economy where you can easily deliver packages or drive uber, there will always be close to zero unemployment. This number stopped making sense a few years ago.
> strong consumer spending
In a high inflation environment, one has to consume "strongly" just to maintain the same standards of living.
> average income increasing at a rate higher than inflation
If you underreport inflation, then the average income will increase faster. But even if not, average is not what you and I receive, and it is determined by some people making lots of money while others have stagnating salaries.
> majority is doing better than most years
You cannot prove this from the above points. Average income doesn't mean that the majority is doing better. Something called inequality will not allow that to happen.
> They might not feel that way though
That is pop psychology at its worst. Nobody cares about feelings, you just need to look at the numbers in a critical way.